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Basic Accounting Terminology

Terms

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Define asset.
Anything of value that is owned.
What is account balance?
The amount in an account.
What is the account title?
The name of the account.
Define accounting.
Planning, recording, analyzing, and interpreting financial information.
What does the accounting equation refer to?
Shows the relationship among assets, liabilities and owner's equity.
What is a liability?
Anything that is owed.
What is a balance sheet?
A financial statement that reports assets, liabilities,and owner's equity on a specific date.
What are equities in accounting?
Financial rights to the assets of a business.
What is owner's equity?
The amount left after all liabilities are subtracted from all assets.
What is a transaction in accounting?
A business activity that changes assets, liabilities, or owner's equity.
Define account.
A record summarizing all the information about a single item in the accounting equation.
What are accounting records?
Organized summaries of a business's financial activities.
What is an accounting system?
A planned process for providing financial information that will be useful in managing a company.
What does capital refer to in accounting?
The account that summarizes the owner's equity.

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